L'Oréal, the French cosmetics powerhouse valued at around one hundred eighty-eight billion euros, has officially urged the European Union to exclude the beauty sector from its proposed retaliatory tariffs against the United States.

This request arises in the context of escalating trade disputes affecting the luxury and consumer goods markets.

In March, L'Oréal’s CEO indicated the company's readiness to adjust should tariffs be enacted, highlighting its pricing power and favorable currency conditions stemming from the robust US dollar.

He emphasized that while tariffs can be navigated, they ought not to form part of a reciprocal trade policy.

Following this, L'Oréal established a coalition of fifteen beauty companies to formally request the European Commission remove the beauty industry from its preliminary list of targeted American imports.

The EU had prepared a ninety-nine-page document detailing potential tariff targets, originally slated to be implemented on April 1. However, the European Commission postponed the rollout until April 13 to facilitate additional diplomatic discussions with the United States.

The French spirits sector, also facing the threat of US tariffs as high as two hundred percent, joined in advocating for this delay.

France’s cosmetics industry association has opposed new tariffs, referencing trade statistics indicating that France imports around five hundred million euros of American cosmetics annually while exporting roughly two and a half billion euros worth of personal care products to the US. The wider European cosmetics industry sustains approximately two million jobs throughout the continent.

While L'Oréal produces about two-thirds of its products sold in the US domestically, internal sources reveal that its fragrance and scented product divisions are particularly susceptible to tariffs.

A decline in these areas could adversely affect the company’s financial performance, which is already strained by diminishing consumer confidence in China.

China remains a crucial market for the global cosmetics sector.

With its growing middle class, it is now the second-largest market for beauty products worldwide, following the US.

L'Oréal has reported falling sales in China over several quarters: a decline of six point five percent in Q3 2024, three point six percent in Q4, and an overall decrease of around four percent for the entire year.

China represents approximately seventeen percent of the company's total sales.

In contrast, US sales experienced a modest growth of one point four percent in 2024.

Over the last year, L'Oréal's share price has dropped by about nineteen percent after several years of growth during the COVID-19 pandemic, which had been partly fueled by increased demand for premium cosmetics.

Despite this recent downturn, the stock has appreciated by forty-eight percent over the past five years.

In 2024, L'Oréal achieved annual revenues of forty-three point four eight billion euros, reflecting a year-over-year increase of five point six percent.

Its net profit reached six point four one billion euros.

For comparison, its American competitor, Estée Lauder, is currently valued at around twenty-four billion US dollars.

The New York-based company has seen its share price decline by approximately fifty-seven percent over the past five years, with a fifty-two percent drop in the last year alone.

L'Oréal’s strong performance has made it a significant investment for various distinguished funds.

One prominent supporter is Terry Smith, a renowned UK investor who manages thirty-six billion pounds in assets through his fund.

The cosmetics industry’s push for exemption, similar to that of the spirits sector, has elicited public backlash.

Critics argue that excluding luxury items from the EU’s trade response demonstrates a disconnected perspective, particularly given the continuing economic tensions stemming from the previous US administration.